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The Indian stock market has entered the new year with a strong note. The benchmark indices ascended nearly 3% in the first week of the new year. Among various stocks, many experts expect the following top ten stocks to deliver strong returns over the next few weeks. 

1. Hindalco Industries Ltd: 507.50 INR +9.55 (1.92%)

Hindalco is the primary metals company of the Aditya Birla Group. Its stock has gained above 2% on January 12, 2022, after Novelis Inc’s – its wholly-owned subsidiary – announced to invest $365 million to build the recycling plant.

There is a healthy intermediate uptrend for the stock with consistent higher tops and bottoms during the entire previous year. There has been a recent correction, and the stock has thereafter bounced back. Breaking out on Friday, the stock recorded above-average volumes. 

Insights – Know Before You Invest
Sector Aluminium
Market Cap INR 114,043 Crores
20D Avg Volume 7,109,305
20D Avg Delivery 36.37%
Face Value 1
Book Value Per Share 296.13
Industry Price Earning (P/E) Ratio 57.26
Price-to-Book (P/B) Ratio 1.72
Dividend Yield 0.59
Peers JSW Steel, Tata Steel, SAIL, NMDC

 

Company SWOT Analysis
Strengths A growth stock selected based on CANSLIM investment criteria – fundamental and technical analysis.
Weaknesses Declined ROE in the last two years
Opportunities Brokers upgraded recommendation in previous three months
Threats Boosting trend in non-core income

 

2. Oil and Natural Gas Corporation Ltd. (ONGC): 163.80 INR -1.15 (-0.70%)

With a sudden increase until October 2021, stock price documented a corrective phase within an uptrend. The volumes have been reasonable during the upward price move and low during corrections, which is a favorable sign. There has been some buying interest. The stock price has shown a breakout above its swing high on the 1-15-minutes chart. Experts are expecting the stock to rally in the near term. 

Insights
Sector Oil Drilling And Exploration
Market Cap INR 206,631 Crores
20D Avg Volume 11,769,355
20D Avg Delivery 43.02%
Face Value 5
Book Value Per Share 160.8
Industry Price Earning (P/E) Ratio 16.68
Price-to-Book (P/B) Ratio 1.03

 

SWOT Analysis
Strengths High trailing twelve months (TTM) Earnings Per Share (EPS) Growth
Weaknesses Return on capital employed (RoCE) declined in the last two years, showing inefficient use of means to generate profits.
Opportunities The current TTM P/E Ratio is less than the previous 3 Years P/E
Threats Rising Trend in Non-Core Income
Face Value 5
Book Value Per Share 160.8
Industry Price Earning (P/E) Ratio 16.68
Price-to-Book (P/B) Ratio 1.03
Dividend Yield 2.19
Peers Reliance, Petronet LNG, Oil India, HOEC

 

3. Dr Lal Pathlabs : 3,766.55 INR +93.75 (2.55%)

The stock is fundamentally strong. The stock is presently trading at Rs. 3766. Investors should show a buying interest for Lal Path Labs stock in the short term because of a breakout above a declining trendline resistance of the consolidation. During the last month, it was observed that the volume action was good during an up move in prices, but corrections were not backed by higher volumes, which is a favorable sign. 

Insights
Sector Pharmaceuticals
Mkt Cap (Rs. Cr.) INR 31,180 Crores
20D Avg Volume 160,607
20D Avg Delivery 60,070
Face Value 10
Book Value Per Share 148.33
Industry Price Earning (P/E) Ratio 127.03
Price-to-Book (P/B) Ratio 25.21
Dividend Yield 0.54
Peers Metropolis, Apollo Hospital, Max Healthcare, Fortis Health

 

SWOT Analysis
Strengths High Piotroski Score with strong financials
Weaknesses Mutual Funds decreased their shareholding last quarter
Opportunities Positive Breakout First Resistance
Threats Degrowth in earnings in one fiscal quarter than the previous

 

Piotroski’s score is based on the three most important criteria – Leverage, Operating Efficiency, and Profitability. Nine criteria were used to determine the score that shows the strength of a firm’s financial position.

 

4. Ultratech Cement: 7,606.80 INR -51.90 (-0.68%)

The company declared the commissioning of Line II of Uttar Pradesh based Bara Grinding Unit. The line I was earlier commissioned in Jan 2020, with capacity utilisation of over 80%.

Backed by high volumes, the stock broke out of the recent trading range on new year’s eve. The intermediate technical setup looks buoyant with the stock trading above key moving averages, and the uptrend is set to continue. 

Insights
Sector Cement-Major
Market Cap INR 219,582 Crores
20D Avg Volume 264,786
20D Avg Delivery 48.71%
Face Value 10
Book Value Per Share 1530.5
Industry Price Earning (P/E) Ratio 40.44
Price-to-Book (P/B) Ratio 4.98
Dividend Yield 0.49
Peers Shree Cements, Dalmia Bharat, Ambuja Cements

 

SWOT Analysis
Strengths Improved RoCE in previous two years- effective use of capital to generate profit
Weaknesses Rising costs Year-over-Year (YoY) for long term projects
Opportunities Brokers upgraded recommendation in previous three months
Threats Upcoming results for Nifty500 with decreasing share price over the week

 

5. State Bank of India (SBI): 511.35 INR +1.10 (0.22%)

After a short-term correction, there is a double bottom formation on daily and weekly charts. Such a promising bullish candle indicates a strong possibility of a new uptrend. 

Insights
Sector Public Banking Sector
Market Cap INR 456,360 Crores
20D Avg Volume 16,015,921
20D Avg Delivery 34.14%
Face Value 1
Book Value Per Share 293.13
Industry Price Earning (P/E) Ratio 21.27
Price-to-Book (P/B) Ratio 1.75
Dividend Yield 0.78
Peers Bank of Baroda, Canara Bank, Indian Overseas Bank, PNB

 

SWOT Analysis
Strengths Increasing Net Cash Flow
Weaknesses High Debt
Opportunities The current TTM PE Ratio is lower than in the past 3 Years
Threats Increased NPA in Recent Results

 

6. Asian Paints: 3,456 INR -87.55 (-2.47%)

Recently, the stock gave breakouts of the ‘SAUCER’ price pattern on the weekly charts, and it has continuously been making lifetime highs since August 2020. It shows a solid positive undertone with a big bullish candle that is backed by strong volumes indicating a favorable trend.

Insights
Sector Paints & Varnishes
Market Cap INR 331,522 Crores
20D Avg Volume 799,696
20D Avg Delivery 50.75%
Face Value 1
Book Value Per Share 137.92
Industry Price Earning (P/E) Ratio 103.05
Price-to-Book (P/B) Ratio 25.06
Dividend Yield 0.52
Peers Berger Paints, Kansai Nerolac, Indigo Paints, Akzo Nobel

 

SWOT Analysis
Strengths Low Debt
Weaknesses Negative Breakdown Third Support
Opportunities Brokers upgraded recommendation in previous three months
Threats Recent Broker Downgrades in Target Price

 

7. Hindustan Unilever (HUL): 2416.00 INR +3.10 (0.13%)

HUL has raised its product prices – soaps and detergents – by 3-20%. Net Sales are expected to rise by 7.3% YoY (up 0.2% QoQ) to Rs. 13,046 crore. The company has sustained a good dividend track report for five years. The company has announced an equity dividend of 3100% (Rs. 31 per share) for the year ending March 2021 – a dividend yield of 1.29% at the current share price of Rs. 2408.60. Earnings before interest, tax, depreciation, and amortisation (EBITDA) are likely to rise by 6.2% YoY.

There is a higher bottom formation on daily charts for the stock, indicating a new uptrend.

Insights
Sector Personal Care
Market Cap INR 567,238 Crores
20D Avg Volume 1,274,903
20D Avg Delivery 62.25%
Face Value 1
Book Value Per Share 202.99
Industry Price Earning (P/E) Ratio 66.59
Price-to-Book (P/B) Ratio 11.9
Dividend Yield 1.28
Peers Dabur India, Godrej Consumer, Marico, P&G

 

SWOT Analysis
Strengths No Debt
Weaknesses Mutual Funds reduced their shareholding last quarter
Opportunities Brokers upgraded recommendation in previous three months
Threats Recent Broker Downgrades in Target Price

 

8. HCL Tech: 1334 INR -17.90 (-1.32%)

After a range breakout formation on daily charts, the stock has maintained significantly higher high-low formations and charts indicate a strong possibility of a further uptrend from current levels. For Q3 2021, the company reported a total income of Rs 20895 Crores, an increase of 2.81% from last quarter. The net profit after tax was documented at Rs 3263.00 crores in the latest quarter. Promoters held a 60.33% stake in the company as of Q3 2021, DIIs owned 12.47%, and FIIs  22.3%. Backed by volumes and favorable technical indicators, the stock confirms the bullishness. 

Insights
Sector Computers-Software
Market Cap INR 3,62,070 Crores
20D Avg Volume 4,325,797
20D Avg Delivery 49.84%
Face Value 2
Book Value Per Share 221.4
Industry Price Earning (P/E) Ratio 44.3
Price-to-Book (P/B) Ratio 6.03
Dividend Yield 0.75
Peers TCS, Infosys, Wipro, Tech Mahindra

 

SWOT Analysis
Strengths Increasing Net Cash Flow
Weaknesses -ve Breakdown First Support
Opportunities Brokers upgraded recommendation in previous three months
Threats

 

9. Rain Industries Limited (RAIN): 253 INR +12.30 (5.10%)

RAIN is a foremost vertically integrated producer of carbon and advanced materials products with manufacturing facilities in eight countries across three continents. Lately, the stock gave range breakouts above the previous 8-week highs accompanied by supportive volumes. 

Insights
Sector Cement – Major
Market Cap INR 8,523 Crores
20D Avg Volume 3,265,846
20D Avg Delivery 24.30%
Face Value 2
Book Value Per Share 169.62
Industry Price Earning (P/E) Ratio 40.44
Price-to-Book (P/B) Ratio 1.5
Dividend Yield 0.39
Peers Phillips Carbon Black Limited (PCBL), Goa Carbon

 

SWOT Analysis
Strengths High TTM EPS Growth
Weaknesses
Opportunities Positive shifts in share price with upcoming results
Threats The increasing trend in non-core income

 

10. Balaji Amines Ltd: 3,686.70 INR +1.70 (-0.05%) 

Balaji Amines documented improved earnings, revenues, and profit margins. Revenue for FY 2021 is increased by 40% from FY 2020. Net income was increased by 127% from FY 2020. The profit margin has moved up by 18%.

Insights
Sector Chemicals
Market Cap INR 11,945 Crores
20D Avg Volume 99,832
20D Avg Delivery 32.15%
Face Value 2
Book Value Per Share 280.83
Industry Price Earning (P/E) Ratio 51.75
Price-to-Book (P/B) Ratio 13.13
Dividend Yield 0.11
Peers Aarti Ind, Atul, Gujarat Fluoro, Clean Science

 

SWOT Analysis
Strengths High Piotroski Score with strong financials
Weaknesses Increasing costs YoY for long term projects
Opportunities Brokers upgraded recommendation
Threats Rising trend in non-core income

 

Finally, timing the entry points into stock will also matter the most along with the plan to exit it over the next few weeks. The markets might show signs of volatility owing to various macro-economic factors like policy announcements in the U.S and India, but good stocks will eventually hold up.

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